A Russia official reportedly has declared that Moscow can thrive despite falling Crude Oil prices because of its massive gold holdings and the government’s efforts to reduce reliance on energy resources,
Russian Finance Minister Anton Siluanov said that while Moscow is satisfied with the current price of Crude Oil, possible market turmoil will not result in a “shock” to its budget.
“For this reason, the budget is based on budget rules that take into account an oil price of $42 a barrel. And regardless of how things work out with the oil price, we will be able to finance our obligations because we have accumulated sufficient gold reserves, more than 7% of the GDP,” he said.
“Therefore, even if oil prices go to $30 barrel or $20 a barrel we will able to honor our own obligations for three years without any shocks or difficulties for our budget.”
Russia has overtaken China to become the world’s 5th largest official sector holder of gold, as Western sanctions drove buying by its central bank to record highs in Y 2018, Reuters explained.
With support from President Vladimir Putin, the central bank has been betting heavily on bullion, often seen as a safe-haven or a natural hedge against USD, with active purchases in the last 10 years.
In Y 2018, Russia’s buying jumped further as holdings of US Treasury securities were reduced after Washington imposed sanctions on Russian entities in April, the toughest since Moscow’s 2014 annexation of Crimea from Ukraine.
The central bank bought 8.8-M t/oz last year, beating a record 7.2-t/oz set in Y 2017.
Russia has been actively filling its coffers with gold, having added some 12 tonnes of the precious Yellow metal to its reserves in September.
Russia’s total gold holdings currently amount to 72.1 t/oz (2,242.56 tonnes) and are worth around $108-B, according to the latest data from the central bank. The country’s international reserves, which include foreign currency and other high liquid assets, exceeded $535-B as of 11 October